Bringing Clean Power to the Last Mile

Jun 27, 2017

News

It was whilst working on a project to bring laptops to rural African schools that the founders of Fenix International first realised that energy access was a far more pressing issue. Families lacked not just energy to power laptops, but the energy for more fundamental needs: lighting homes, charging phones, and running daily appliances. Securing reliable and affordable energy is one of the core developmental challenges facing the continent, and is highlighted in Sustainable Development Goal 7, which commits to providing global access to affordable, reliable, sustainable, and modern energy for all by 2030. Two in three people in sub-Saharan Africa lack reliable access to electricity, which, in a region that is keen to grow, presents a daunting obstacle to prosperity. On a continent where key infrastructure often does not exist, creative off-grid solutions which employ the latest technology are being used to bridge the energy gap.

Trading temporary for permanent solutions

Through our research, we found that many of those living off-grid in Uganda use a variety of unsuitable fuels such as kerosene and other stop-gaps such as candles and battery-powered torches. These solutions are environmentally unfriendly, inefficient and often dangerous. As well as the increased risk of house fires, particulate matter, generated when fuels such as kerosene are burned, has been linked to an increased risk of acute respiratory problems, pulmonary disease, and lung cancer. [1] Kerosene ingestion is another common issue in emerging markets, especially for young children who may mistake the kerosene, often stored in repurposed bottles, for soda or water. [2]

Another factor to be considered is that living off-grid is not cheap: $27 billion is spent annually on off-grid energy, including lighting and phone charging, across the world as economies of scale cannot be exploited. New approaches that capitalise on the strengths of the region are key to expanding energy coverage.

Playing to strengths

The mobile network is one form of infrastructure that is particularly widespread in Uganda as is the adoption of mobile money – the technology which facilitates payments via mobile phone. This has opened up a range of opportunities when taking into account the relative poverty of the market. At Fenix, we learned that in Uganda, a large percentage of the population who do not have access to a reliable source of electricity nonetheless possess a mobile phone – and therefore access to mobile payments.

The mobile operators are also keen to expand their reach by providing energy solutions, and we were able to partner with MTN, Africa’s largest telco to co-brand, co-market, and distribute our product. We have designed, manufactured, sold, and financed ReadyPay, a solar home system coupled with a lease-to-own model that allows customers to pay for their electricity via their mobile phone. The diversity of Uganda’s population has meant that we now offer five different solar home systems and after-sales services in over 20 languages in a network of physical support centres across the country.

Mobile payments lend themselves to small scale, adaptable energy sources. This is where our home-solar equipment comes in – it is a perfect match for the country’s equatorial location and its well established mobile network.

Breaking down the cost

A full home-solar set-up can cost upwards of $160. When you consider an average income in Uganda is around $2 per day, it is easy to see the challenge this up-front cost poses to consumers. Using small daily instalments made via mobile money, we are able to offer equipment on a lease-to-own model for households, rendering the technology affordable to a much broader part of the population.

Payments of around $0.20 per day, comparable with the current energy spend, enable users to pay for what they use with ease. Through this method, customers receive a high-quality expandable home solar kit and pay for it over a period of 18 to 30 months. After the loan is paid off, customers own the kit and have free power for the remainder of the system’s life. The repayment process has the added benefit of helping people build up a credit score, bringing the possibility of access to additional power upgrades such as more lights, larger panels, or TV systems as well as life changing financial services, such as school-fee loans, to unbanked individuals.

Expansion to the last mile

By 2020, it is estimated that one in three off-grid households will use home solar kits. [3] Fenix alone has seen customer demand soaring to reach over 115,000 customers in under 4 years. This is a major milestone for Uganda as it means that distributed renewable energy is leapfrogging permanent infrastructure like conventional power grids. This development parallels the way in which telecommunications jumped straight to the mobile network, skipping the requirement of a wired phone network in the country.

Renewable firms have been treated favourably by governments across Africa as policies which support their growth, such as tax-exemptions, were put in place. In East Africa, however, several tax exemptions for solar home systems have recently ended, putting the rapid scaling of energy access under threat. Tax exemptions and clear renewables policies have done much for firms wanting to enter the market and introduce innovative solutions which are both affordable and clean. Governments must continue to be open to new ways of tackling the energy gap that exists across many African nations, and Uganda provides a strong example of what can be achieved.